2025-12-17 06:32:00
The end of the year is often considered the ideal time to rebalance a portfolio, both from a tax perspective and because it is easier to assess the performance of assets relative to the target allocation and identify any resulting imbalances.
But what if the idea was to build a portfolio from scratch based on the most promising assets— which ones should carry more weight?
Starting with the S&P 500, forecasts for 2026 vary quite a bit, but the overall outlook remains optimistic:
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Bank of America takes the most cautious view, expecting the index to end the year around 7,100 points, a modest 4% rise from current levels.
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Goldman Sachs has revised its outlook upward, anticipating a 7,600-point finish, driven by solid corporate earnings and accelerated adoption of AI.
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Citigroup is slightly more optimistic, targeting 7,700 points, also citing resilient earnings and continued AI-related investment tailwinds.
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The most bullish forecast comes from Oppenheimer, which projects that the index could reach 8,100, driven by shifts in monetary and fiscal policy that are expected to boost earnings growth.
Turning to gold (XAU/USD), ING expects prices to average around $4,325 per ounce. Deutsche Bank has raised its forecast to $4,450, citing strong investor demand, ongoing central-bank purchases, and limited supply growth. RBC Capital Markets is more optimistic, projecting an average of $4,600, with gold potentially ending the year near $4,800. The most bullish view comes from Goldman Sachs, which predicts gold reaching as high as $4,900 by year-end, driven by continued central bank buying and renewed private-sector inflows as the Fed eases its policy.
As for oil, the EIA projects WTI crude to average around $51 per barrel in 2026, with Brent following a similar path as global supply continues to outpace demand growth. Goldman Sachs broadly agrees, forecasting Brent at roughly $56 and WTI near $52 per barrel.
Expectations for the US dollar remain subdued, with ING anticipating that the DXY will stay under pressure throughout 2026 rather than regain its previous strength. This environment favors relative-value trades across major currencies, with the euro likely to maintain its gains, while sterling may face downside risks amid softer growth and potential fiscal challenges.
On the fixed income side, 2026 looks broadly positive, supported by expected Fed rate cuts and the resilience of the US economy. However, inflation, fiscal pressures, and central bank risks continue to warrant caution.
Overall, gold and the S&P 500 appear most likely to outperform in 2026, though the outlook could shift depending on global events.
